The US dollar’s status as a safe-haven asset is under scrutiny amid rising tensions between the US and its trading partners. Last week, the greenback plummeted after President Trump imposed tariffs on major economies. However, in recent days, investors have sought refuge in the dollar once again, driving up its value.
The debate over whether the dollar remains a reliable safe-haven asset or is vulnerable to rapid market fluctuations has gained momentum. The “Fragile Five” – a group of emerging markets with high risk profiles – often experience sudden shifts in sentiment and portfolio flows, which can impact global markets.
Despite recent volatility, investors are increasingly looking to the dollar as a safe haven. This trend is driven by concerns over economic uncertainty, particularly among countries with close ties to the US. As financial distress builds, investors seek assets that provide stability and protection from market downturns. The dollar’s value has surged in response to these sentiment shifts, sparking questions about its long-term status as a safe-haven currency.
Source: https://www.bloomberg.com/opinion/articles/2025-04-07/why-buy-the-dollar-if-the-us-becomes-an-economic-island